Higgins Armory had been losing money for years

Higgins Armory Museum, which will close Dec. 31, has been losing money for years, with an operating deficit that neared $1 million several years ago.

Suzanne W. Maas, a turnaround specialist hired by the museum in 2010 as interim executive director, said she almost immediately realized that the situation could not be reversed. She decided instead that the 82-year-old institution needed to be “restructured.”

When the Worcester Art Museum hired Matthias Waschek as director in November 2011, the two set about to discuss what would essentially be a merger.

“It is the role of the interim to share the truth of the situation” with the board of directors, Ms. Maas said. “I had to deliver that message, which was not the favorite moment of my career.”

In an interview this week, Ms. Maas and Mr. Waschek acknowledged that their talks were kept private. In the fall, as rumors circulated about the possible demise of the Higgins, Ms. Maas denied to a Telegram & Gazette reporter that the museum was in trouble.

The Worcester Art Museum board voted unanimously Oct. 25 to absorb the entire Higgins collection, library, archives and $2.9 million endowment; the building will stay with the Higgins organization. The Higgins board approved the deal unanimously Nov. 6.

The museum, the second largest public collection of armory and armaments in North America, has been running deficits since at least 2008, according to federal tax returns.

In 2009, the shortfall reached nearly $957,307 on an operating budget of $1.5 million, and the museum was dipping into its reserves each year to fund expenses. The deficit was $814,268 in 2010, and cut to $485,927 in 2011, according to the nonprofit's Form 990 tax document.

With a dwindling endowment and a unique eight-decade-old building that was badly deteriorating and costing hundreds of thousands of dollars a year to maintain, Ms. Maas said the future was unsustainable.

“The cost of occupancy is the amount of our deficit,” said Ms. Maas, a Northbridge resident. “The building is part of our identity, but it's also the challenge.”

Ms. Maas said that when the museum received a state grant to re-glaze the several thousand small panes of glass that make up the fašade of the art-deco edifice, a contractor declared the job was impossible. “You couldn't touch it,” she said.

In 2008, a city study looked at the feasibility of Higgins shedding its longtime home and moving to the Worcester Memorial Auditorium, a vacant building at the northern end of downtown built in 1933.

The Higgins board nixed the move, which would have cost an estimated $40 million.

Ms. Maas said that after news came out about the possible move and Higgins' apparent fiscal difficulties, donors significantly reduced contributions to the museum. More recently, a capital campaign raised about $2.78 million, falling short of a $5 million goal, Ms. Maas said.

Apart from its aging building, Ms. Maas maintained, the biggest financial problem the museum has faced has been the apparent inability of local donors to shore up the endowment. The museum began with a small endowment of $17,000.

The museum has received foundation help for capital needs, including repairs to the hung glass and steel building.

“It's not possible for foundations here to give ongoing support,” she said.

“We could have a much better building and still not be sustainable” without a stronger endowment, she said. It would take an endowment of $15 million, “just to operate,” she said.

And while Ms. Maas maintained that attendance has risen slightly in the last few years — to 62,000 in 2012 — she noted that financial cutbacks at schools have hit bus transportation and state classroom learning requirements have also reduced school groups.

Another impediment has been a lack of marketing, Ms. Maas said. When she arrived in 2010 after the departure of former executive director Nikki Anderson, there was no marketing department.

In 2011, Ms. Maas hired the Providence-based advertising-public relations firm RDW and spent $200,000 on marketing over the last two years.

Meanwhile, a committee of museum officials is working on what to do with the Higgins building, which is listed on the National Register of Historic Places.

The assessed value of the 100 Barber Ave. structure in the Greendale neighborhood is $3,088,600, according to city records. The third-of-an-acre parcel it sits on is assessed at $884,500.

Major renovations would be required, and the building's small rooms, huge Great Hall with its many columns and leaded glass fašade would be difficult to adapt for new uses.